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How to Start a Headhunter Business

A headhunter business, also known as an executive search firm or recruitment agency, is a type of business that specializes in finding and recruiting top talent for other companies. Headhunters work with companies to identify their hiring needs and then search for potential candidates for those positions.

They often focus on filling senior-level positions or positions that require specialized skills or experience. Headhunters typically work on a contingency basis, meaning that they are only paid if they successfully place a candidate with the company.

They may charge a percentage of the candidate’s salary as a fee or a flat rate for their services. Some headhunters may also offer additional services such as resume writing or interview coaching. Headhunter businesses can be lucrative if they are successful in placing high-quality candidates with companies.

Available data shows that the Executive Search (Headhunting) Market size was valued at USD 17303.35 Million in 2021 and is projected to reach USD 30,318.35 Million by 2030, growing at a CAGR of 6.4 percent from 2022 to 2030.

Steps on How to Start a Headhunting Business

  1. Conduct Market Research

To conduct market research for a headhunter business, it is important to identify the target market and understand its needs and preferences. This can be done through surveys, focus groups, and analyzing industry trends. It is also important to research competitors and their offerings, as well as pricing strategies.

Social media can be a valuable tool for gathering insights into consumer behavior and preferences. Once the research is conducted and concluded, it can be used to develop marketing strategies and tailor services to the target market.

a. Who is the Target Market for Headhunter Business?

The target market for a headhunter business is typically companies or organizations that need to fill high-level executive or professional positions. These could include C-suite executives, senior managers, or specialized professionals with unique skills or experience.

The target market may vary depending on the specific industry or sector the headhunter business is focused on serving. So also, the target market may also include individual executives or professionals seeking career opportunities, as they may work with headhunters to find new job opportunities and advance their careers.

b. Is Headhunter Business a Profitable Business?

Yes, the headhunter business is a profitable business. Available data shows that the Executive Search (Headhunting) Market size was valued at USD 17303.35 Million in 2021 and is projected to reach USD 30,318.35 Million by 2030, growing at a CAGR of 6.4 percent from 2022 to 2030.

c. Are There Existing Niches in the Industry?

No, there are no clear-cut niche ideas when it comes to the headhunter business because the headhunter business is a niche idea in the human resource and recruitment industry.

d. Who are the Major Competitors?
  • Heidrick & Struggles
  • Korn Ferry
  • Spencer Stuart
  • Egon Zehnder
  • Russell Reynolds Associates
  • Stanton Chase
  • Boyden
  • DHR International
  • Odgers Berndtson
  • Caldwell Partners
  • AESC
  • Crist|Kolder Associates
  • Harvey Nash
  • Lucas Group
  • N2Growth
  • Park Avenue Group
  • Slayton Search Partners
  • Solomon Page
  • Tatum LLC
  • ZRG Partners.
e. Are There County or State Regulations or Zoning Laws for Headhunter Business in the United States?

In the United States, regulations and zoning laws for a headhunter business can vary depending on the state, county, and city where the business is located. In general, headhunter businesses are considered professional services and can typically be located in commercial areas or office buildings.

It is important to check with local authorities to ensure compliance with zoning regulations and any necessary business licenses or permits. Additionally, headhunter businesses must comply with federal, state, and local laws related to employment and hiring practices, such as anti-discrimination laws and regulations related to background checks.

f. Is There a Franchise for Headhunter Business?

No, there are no franchise opportunities for headhunter business.

g. What Do You Need to Start a Headhunter Business?
  • Business plan
  • Legal structure
  • Licenses and permits
  • Standard office facility in a suitable location
  • Employees
  • Marketing and advertising plans
  • Funding
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.

Some of the catchy business name ideas suitable for a headhunter business are;

Creative Headhunter Business Name ideas
  • Mary Smith and Partner® Headhunter Firm, Inc.
  • John Johnson® Headhunter Firm, LLC
  • Jennifer Brown™ Headhunter and Recruitment Firm, Inc.
  • Michael Davis® Headhunter and Recruitment Firm, LLC
  • Elizabeth Martinez and Partner® Headhunter Firm, Inc
  • David Lee® Headhunter and Recruitment Firm, Inc.
  • Michelle Taylor® Headhunter and Recruitment Firm, Inc.
  • Samantha Green™ Headhunter and Recruitment Firm, LLC
  • Robert Wilson© Headhunter and Recruitment Firm, LLC
  • Kimberly Scott® Headhunter and Recruitment Firm, Inc.
  • James Thompson™ Headhunter and Recruitment Firm, Inc.
  • Rachel Hernandez® Headhunter and Recruitment Firm, Inc.
  • Thomas Turner® Headhunter and Recruitment Firm, LLC
  • Victoria Nguyen® Headhunter and Recruitment Firm, LLC
  • Anthony Wright® Headhunter and Recruitment Firm, Inc.
  • Katherine Davis® Headhunter and Recruitment Firm, Inc.
  • Benjamin Baker© Headhunter and Recruitment Firm, LLC
  • Lisa Johnson® Headhunter and Recruitment Firm, Inc.
  • Samuel Garcia® Headhunter and Recruitment Firm, Inc.
  • Linda Rodriguez© Headhunter and Recruitment Firm, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for Headhunter Business?

The best type of business structure for a headhunter business depends on several factors, including the size of the business, the number of owners, and the level of personal liability exposure the owners are willing to accept. However, we usually recommend a limited liability company (LLC) for headhunter business.

An LLC is a popular choice for startup businesses because it offers personal liability protection for the owners while allowing them to be taxed as a pass-through entity. This means that the profits and losses of the business are passed through to the owners’ personal tax returns, avoiding double taxation.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Headhunter Business?
  • Business License
  • Building permit
  • Fire safety license and permit
  • Healthcare-related permits
  • Professional license (HR and recruitment licenses et al)
  • Zonal permit.
d. What Type of Certification is Needed to Open a Headhunter Business?
  • Certified Staffing Professional (CSP) from the American Staffing Association
  • Professional in Human Resources (PHR) or Senior Professional in Human Resources (SPHR) from the Human Resources Certification Institute
  • Certified Recruitment Professional (CRP) from the National Association of Personnel Services
  • Certified Personnel Consultant (CPC) from the National Association of Personnel Services.
e. What Documents are Needed to Open a Headhunter Business?
  • Business plan
  • Business License
  • Employer Identification Number (EIN)
  • State-specific licenses and permits
  • Building permit
  • Fire safety license and permit
  • Professional licenses and certification
  • Zonal permit
  • Insurance policies
f. Do You Need a Trademark, Copyright, or Patent?

Whether you need a trademark, copyright, or patent for your headhunter business will depend on the specific intellectual property you want to protect. If you want to protect your business name, logo, or other branding materials, you may want to consider registering a trademark with the US Patent and Trademark Office (USPTO).

If you create original content for your headhunter business, such as marketing materials or software, you may want to consider registering a copyright with the US Copyright Office. If your headhunter business invents a new technology or product, you may want to consider obtaining a patent from the US Patent and Trademark Office.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Headhunter Business?

When it comes to starting a headhunter business, the startup costs vary, and they could range from as low as $5,000 to over $150,000.

b. What are the Costs Involved in Starting a Headhunter Business?
  • Business Registration Fees – $750.
  • Legal expenses for obtaining licenses and permits – $1,800.
  • Marketing, Branding, and Promotions – $2,000.
  • Business Consultant Fee – $2,500.
  • Insurance – $2,800.
  • Rent/Lease – $60,000
  • Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
  • Operational Cost (salaries of employees, payments of bills et al) – $60,000
  • Store Equipment (cash register, security, ventilation, signage) – $2,350
  • Equipment, Furniture, and Software – $10,000
  • Website: $1,200
  • Opening party: $5,000
  • Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Headhunter Business?
  • The size of the headhunter business
  • The choice of location
  • The required licenses and permits
  • The cost of hiring and paying a business consultant and attorney
  • The cost of branding, promotion, and marketing of the headhunter business
  • The cost of furnishing and equipping the headhunter office facility
  • The cost of the insurance policy covers
  • The cost of registering the business
  • Cost of recruiting and training your staff
  • The cost for the purchase and customizing of uniforms
  • The cost for the grand opening of the headhunter business.
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

No, you don’t need to build a new facility for your headhunter business. It is a business that you can operate from a rented or leased office facility. As a matter of fact, you can operate a headhunter business from a shared office facility.

e. What are the Ongoing Expenses of a Headhunter Business?
  • Employee Salaries and Benefits
  • Office Rent and Utilities
  • Technology and Software such as Applicant Tracking Systems (ATS), Customer Relationship Management (CRM) software, and other tools that help the recruitment process.
  • Marketing and Advertising
  • Professional Memberships and Certifications
  • Legal and Accounting Fees.
f. What is the Average Salary of your Staff?
  • Chief Executive Officer (Owner) – $58,000 per year
  • HR Manager- $55,000 per year
  • Account Manager – $52,000 per year
  • Business Development Manager- $50,000 per year
  • Recruiters (Headhunters) – $40,000 per year
  • Administrative Assistant – $35,000 per year
  • Customer Services Executive – $32,000 per year
g. How Do You Get Funding to Start a Headhunter Business?
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Mary Smith and Partner® Headhunter Firm, Inc. is a leading headhunting firm based in New York City, New York. Our team of experienced recruiters specializes in executive search, talent acquisition, and recruitment services across a range of industries, including healthcare, finance, technology, and more.

At Mary Smith and Partner® Headhunter Firm, Inc., we believe that success comes from building strong relationships with our clients and candidates. We take the time to understand their needs, priorities, and culture to ensure the perfect match. Our proven track record of successful placements and satisfied clients is a testament to our commitment to excellence.

b. Products and Service
  • Executive search
  • Direct hire staffing
  • Temporary staffing
  • Payroll and compliance services
  • Talent acquisition consulting.
c. Mission Statement

At Mary Smith and Partner® Headhunter Firm, Inc., our mission is to provide high-quality staffing solutions to our clients, helping them achieve their business goals by finding the best talent in the industry. We strive to build strong relationships with our clients and candidates, providing exceptional customer service

Vision Statement

Our vision is to be the go-to headhunter firm for businesses across industries, recognized for our deep industry knowledge, an extensive network of candidates, and innovative recruitment strategies.

d. Goals and Objectives

The goals and objectives of a headhunter business are to work with companies to identify their hiring needs and then search for potential candidates for those positions.

e. Organizational Structure
  • Chief Executive Officer (Owner)
  • HR Manager
  • Account Manager
  • Business Development Manager
  • Recruiters (Headhunters)
  • Administrative Assistant
  • Customer Services Executive.

Marketing Plan

a. SWOT Analysis
Strength:
  • Experienced team of recruiters with deep industry expertise
  • A strong network of candidates and client relationships
  • Proven track record of successful placements and satisfied clients
  • Innovative recruitment strategies that set us apart from the competition
  • Strong brand reputation and recognition in the industry.
Weakness:
  • Dependence on a small number of key clients for a significant portion of revenue
  • Limited geographic reach and market penetration
  • High competition in the staffing industry.
Opportunities:
  • Expansion into new markets and industries
  • Development of new recruitment strategies to stay ahead of the competition
  • Growth through strategic partnerships and acquisitions
  • Increasing demand for specialized talent in emerging industries.
Threat:
  • Economic downturns and market volatility impacting client hiring needs
  • Changes in labor laws and regulations affecting the staffing industry
  • Increased competition from other staffing firms and online recruitment platforms
  • Difficulty in attracting and retaining top talent due to a competitive job market.
b. How Does Headhunter Business Make Money?

Headhunter businesses make money by charging a fee to their clients for finding and placing top talent in their organizations. These fees can be structured in a variety of ways, including:

  • Contingency fee
  • Retained search fee
  • Contract staffing fee.

Please note that in addition to these primary revenue streams, headhunter businesses may also generate revenue from related services such as talent consulting, talent management, and training and development programs.

c. Payment Options
  • Credit or Debit Card
  • Cash
  • Electronic Payment Systems such as PayPal or Venmo
  • Checks
  • Bank Transfers.
d. Sales & Advertising Strategies
  • Encourage satisfied clients to refer your services to others in their network. Offer incentives for referrals, such as a discount on services or a referral bonus.
  • Use social media platforms such as LinkedIn, Twitter, and Facebook to showcase your services and expertise. Create engaging content that highlights your knowledge of the industry and your success stories.
  • Optimize your website and blog content for search engines to increase visibility and generate leads. Use targeted keywords and phrases related to your industry and services.
  • Build an email list of potential clients and candidates and send regular newsletters and updates. Share success stories, industry insights, and job openings.
  • Attend industry events, conferences, and trade shows to meet potential clients and candidates. Participate in industry associations and organizations to establish credibility and build relationships.
  • Use targeted online advertising on platforms such as LinkedIn and Facebook to reach potential clients and candidates. Create targeted ad campaigns based on industry, job title, and location.
  • Create valuable content such as whitepapers, case studies, and webinars that showcase your expertise and thought leadership in the industry. Offer this content for free in exchange for contact information from potential clients.

Financial Projection

a. How Much Should You Charge for Your Product/Service?

The fees charged by headhunter firms can vary depending on several factors, such as the industry, location, and level of the positions being filled. Please note that whatever fees headhunters charge are negotiable, and the actual fee charged can depend on several factors, such as the difficulty of the search, the size of the company, and the level of service required

b. How Much Profit Do Headhunter Business Owners Make a Year?

According to a survey conducted by the National Association of Personnel Services (NAPS), the median net profit for staffing and recruiting firms in 2020 was 5.5%. This means that a headhunter business with $1 million in revenue would have a net profit of $55,000.

However, the profit margins can vary widely depending on the type of staffing services offered, the fees charged, and the expenses incurred.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the headhunter business
  • The service offerings of the headhunter business
  • The location of the headhunter business
  • The management style of the headhunter business
  • The business approach of the headhunter business
  • The advertising and marketing strategies adopted by the headhunter business.
  • The number of years the headhunter business has been in business
d. What is the Profit Margin of a Headhunter Business?

On average, the profit margin for headhunter products ranges from 25% to 35%, depending on the location, and service offerings.

e. What is the Sales Forecast?

Below is the sales forecast for a headhunter business. It is based on the location of the business and other factors as it relates to such startups in the United States.

  • First Fiscal Year (FY1): $350,000
  • Second Fiscal Year (FY2): $500,000
  • Third Fiscal Year (FY3): $750,000
  1. Set Up your Shop/Office

a. How Do You Choose a Perfect Location for Headhunter Business?
  • The demography of the location
  • The demand for headhunter services in the location
  • The number of corporate organizations and pool of experienced employees in the location
  • Accessibility of the location
  • The number of headhunter firms and recruitment agencies in and around the location
  • The local laws and regulations in the community/state
  • Traffic, parking, and security et al
b. What State and City is Best to Open a Headhunter Business?
  • New York City, New York
  • San Francisco, California
  • Houston, Texas
  • Chicago, Illinois
  • Atlanta, Georgia
  • Boston, Massachusetts
  • Dallas, Texas
  • Los Angeles, California
  • Washington, DC
  • Seattle, Washington.
c. What Equipment is Needed to Operate a Headhunter Business?
  • Computer and software
  • Phone and Internet service
  • Accounting software
  • Mobile devices such as smartphones and tablets can be useful for conducting interviews, managing schedules, and staying connected with clients and candidates.
  • Recruiting tools such as job boards, applicant tracking systems, and social media platforms can be useful for sourcing candidates and managing the recruitment process.
  • Office equipment such as computers, printers, scanners, and office supplies to manage bookings and finances.
  1. Hire Employees

Although it is possible to run a headhunter firm as a one-man show, if you want to build a business that will grow, then you should consider hiring key employees to occupy various positions in your organization. The truth is that hiring employees can allow you to take on more clients and increase your capacity for delivering high-quality work.

  1. Launch the Business Proper

Organizing an opening party for a new headhunter business can be a good way to introduce your business to the community and create awareness about your services. However, whether or not to have an opening party is ultimately a decision that depends on your individual business and goals.

If you want to organize a proper launch for your headhunter business, then you must make sure to invite potential clients, key stakeholders, and other members of the community who may be interested in your services.

a. What Makes a Headhunter Business Successful?
  • Being consistently reliable
  • Excellent customer service
  • Excellent facilities
  • Efficient operations
  • Compliance with regulations
  • Hiring skilled and knowledgeable employees and providing ongoing training that will ensure you deliver high-quality services.
b. What Happens During a Typical Day at a Headhunter Business?
  • The office is open for the day’s work
  • Routine staff meetings, briefing, and de-briefing
  • The core duties are carried out which may include client management, candidate sourcing, candidate screening, candidate interviews, reference checks, professional development, and documentation
  • Administrative tasks such as scheduling appointments, billing, invoicing, and managing supplies and equipment, are carried out
  • The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Headhunter Business?
  • Ability to spot talents
  • Project management skills
  • Excellent customer service skills
  • Human resources skills
  • Interpersonal skill
  • Accounting and bookkeeping skills
  • Business management skills
  • Organizational skills
  • Work experience in the human resources and recruitment industry
  • Experience in managing people
  • Experience in business administration.